BP’s boss has pledged to “fundamentally reset” its strategy and announce a “new direction” for the oil group, amid a slump in profits and pressure from the activist investor Elliott Management.
Murray Auchincloss said he would announce details of his plans at an investor day on February 26, after reporting that underlying profits fell by a third to $9 billion last year. He is widely expected to ditch its goal of cutting oil and gas output and scale back its low-carbon spending plans.
BP’s fourth-quarter profits came in at $1.17 billion, slightly lower than analysts’ forecasts of $1.26 billion and well down on the $3 billion it made in the same period a year earlier, as it was hit by a drop in margins on fuel refining.
• What could activist investor Elliott ask BP to do?
BP said that it would buy back a further $1.75 billion of shares in the coming quarter as promised but did little to alter analyst expectations of a cut for future quarters, saying it would “review elements of our financial guidance, including our expectations for 2025 share buybacks and capital expenditure” at the investor day.
Auchincloss took over running BP after Bernard Looney’s abrupt exit in late 2023 for failing to disclose relationships with colleagues. He was previously chief financial officer alongside Looney as the company unveiled a radical pivot towards green energy that involved slashing its oil and gas output and pouring billions of pounds into low-carbon investments.
BP’s shares have underperformed its more oil-focused rivals as its green investments have struggled to deliver promised high returns. It emerged at the weekend that Elliott, the aggressive New York hedge fund, had built a significant stake in BP and planned to use it to push for sweeping changes at the company.
Auchincloss said he had already taken “incredible amounts of action” during his year in charge, ditching 30 weaker projects, approving ten new ones, and agreeing to spin off its offshore wind business into a joint venture that will require much less capital investment from BP. He said these changes had created “a platform for growth moving forward” and the strategy reset would be “based on all those moves”.
Asked whether the old strategy was wrong with hindsight, he said: “Things change over time: no one could have predicted Covid, no one could have predicted Russia, many things happened along that time and nations change as well, and their appetites. We’ve seen changes in governments’ attitudes towards security of supply, towards energy affordability. So you have to move in line with society.”
He said he felt “broad support” from his top 20 to 30 shareholders for the changes he had made in the past year and declined to comment on Elliott, describing the news as “media speculation”.
Following Russia’s invasion of Ukraine, BP announced it would exit its near-20 per cent holding in the Russian state oil company Rosneft, but is yet to sell the stake. Analysts have started to question what a potential Russia-Ukraine peace deal could mean for this stake, which BP has already written down.
Auchincloss said: “Our focus continues on trying to monetise the assets — remember there are more than a dozen countries that have sanctions on Rosneft.”
The forthcoming investor day had been scheduled to take place alongside BP’s results but was delayed so that Auchincloss could recover from a medical procedure.
Auchincloss said that the investor day would demonstrate BP’s “focus on actions to drive performance” and enable it to “grow cash flow and returns — and shareholder value”.
“It will be a new direction for BP, and not business as usual,” he said.
Lydia Rainforth, an analyst at Barclays, said the results were “not good” and that Auchincloss’s comments suggested “a recognition of the sense of urgency that is needed to deliver stronger results”.
